Fitch: Timeshare Delinquencies Down Again in 1Q

The percentage of securitized timeshare loans with late payments declined again in the first quarter, according to Fitch Ratings.

Total delinquencies for the first quarter were 3.27%, down from 3.55% in the fourth quarter of 2012.

Fitch said the improvement in timeshare ABS delinquencies last quarter is typical of springtime performance. However, delinquencies are 0.82% lower than levels seen at the same time last year, when they were 3.58%.

Defaults also fell in the first quarter, to 0.72% from 0.75% in the fourth quarter of 2012.

While improvement this quarter is evident across all issuers, some of the overall improvement is attributed to slight shifts in the composition of Fitch’s index. Transactions from issuers with lower historical delinquency and default rates were added to the benchmark in 2012.

Delinquency trends have largely normalized at their historical levels following the dramatic increases that occurred in 2008 and 2009. However, defaults still remain elevated from pre-recessionary levels.

Fitch's timeshare ABS index is an aggregation of performance statistics on pools of securitized timeshare loans originated by various developers. Expected cumulative gross defaults on underlying transactions can range from 10% to above 20%.

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